The UK property market ended the year on a stronger footing after recording a third consecutive quarter of house price growth, according to the latest Property Market Index Review from London estate agency Benham and Reeves.
The data points to a steady recovery rather than a rapid rebound, with improving confidence among both buyers and sellers helping to support activity despite higher interest rates remaining a headwind.
Across the UK, the average house price reached £311,154 in the third quarter, representing a quarterly increase of 0.9 per cent and an annual rise of 2.2 per cent. In London, average prices climbed to £574,254, marking annual growth of 1.1 per cent, although values were broadly flat compared with the previous quarter. Agents say this stability reflects a market that is regaining balance after a prolonged period of uncertainty.
One of the clearest signs of recovery has been the narrowing gap between what sellers are asking and what buyers are prepared, or able, to pay. Nationally, the average mortgage-approved price stood at £278,890, compared with an average asking price of £370,672. While the difference remains significant, the gap has narrowed to 32.9 per cent, down from 35.5 per cent in the second quarter.
London has followed a similar pattern. The gap between mortgage-approved prices and asking prices in the capital fell to 30.4 per cent, suggesting sellers are becoming more flexible in response to affordability pressures and buyer sentiment.
The difference between asking prices and achieved sale prices has also tightened. Across the UK, the average sold price was £291,411, around 21.4 per cent below the original asking price. This represents a notable improvement from the 24.1 per cent gap recorded in the previous quarter. In London, the gap reduced to 22.9 per cent, the smallest since the first quarter of 2023, highlighting a more realistic approach from vendors.
Marc von Grundherr, director at Benham and Reeves, said the figures underline a more constructive year for the housing market than many had anticipated. He said that despite the pressure of elevated borrowing costs, steady growth across all three quarters of 2024 reflected a shift in behaviour among sellers.
“Sellers are showing a more pragmatic approach by lowering asking price expectations, bridging the affordability gap with buyers,” he said. “This has led to an uptick in transactions and a healthier pace of growth.”
Looking ahead to 2025, the agency expects the market to enter the new year on firmer ground. With sellers increasingly willing to meet buyers halfway and prices maintaining modest upward momentum, the outlook is supported by improving confidence rather than speculative excess. While affordability will remain a constraint, particularly in higher-value markets, the narrowing gap between expectations and reality suggests the foundations for more stable growth are now in place.
